“Your first 50 right steps to enter the Russian food market”.
Step № 33 – “Open a joint venture or buy a stake in a Russian business”
Opening of a joint venture involves creation of a new company with your participation in the charter capital of a Russian legal entity.
Advantages: your Russian partner is aware of the situation on the market; he/she is familiar with the law and has necessary knowledge and contacts in the industry for a confident start of your new joint venture.
You as a foreign founder can, for example, provide industrial equipment that is not produced in Russia. In accordance with the Tax Code of the Russian Federation such equipment is exempt from import tax.
If you have a good and reliable Russian partner that is a Russian company, then opening a joint venture is a very good idea to start on the Russian food market. You will have to share your profits with your Russian partner, but you will avoid a lot of cases of nerves and save a lot of efforts and resources when working on the Russian food market. If you are not completely confident in your abilities, then it is better to choose this option with a joint venture.
However, if you have a strong team, a unique food product, and there is enough funding for the first several months of your operation, it is better to open your own company. To solve all unusual tasks in the food market of Russia, hire a reliable Russian director. If you plan to manage your Russian business yourself, then hire a Russian business advisor from your food industry, it will be even better and cheaper.
Conditions: the procedure and costs are similar to those described in Step # 32 on LLC opening, if the joint venture is established by Russian and foreign founders. Link to this article will be under this post.
If a foreign investor buys a share in an already existing Russian company or becomes a new participant/member in this company by contributing to the charter capital, registration of changes takes 7 working days. Notarization of documents usually costs about 15,000 – 17,000 rubles. There is also a state duty of 800 rubles. Additionally, you will need to pay for translation, certification and forwarding of documents.
Disadvantages: there is one most basic disadvantage. As soon as you stop monitoring the current operational work of your joint venture, your Russian partners are very likely to steal from you. It is not always money. The main problem of foreign companies opening a joint venture in Russia is that they think their Russian partners will treat the joint company will full responsibility. Unfortunately, it does not always happen.
If you want to make profits and develop your business and food products, set up a controlling system of all operational business processes in the company. Especially for those areas where money is spent. There are many honest and decent people in Russia, but like in any other country there are cheaters. Be always aware of all the affairs of the company, at least once a week hold or participate in a general meeting.
As we discussed above, besides opening a new joint venture a foreign investor can acquire a share in the charter capital of a functioning Russian company. He/she can also become a new participant/member of this company via a contribution to the charter capital.
There are no restrictions on the food industry for foreign companies to acquire shares.
This is also a very convenient option. In Russia, there are several main websites where you can find ads about businesses that being sold. You can choose a business from your industry and just buy it. It can be either a trading company or a manufacturer.
You just need to properly examine all the financial documents of this company to understand whether it is profitable or not. In some cases it might be necessary to invest some money to improve such a company , but in any way you will immediately get a completely working business that is “in the market.” You will not have to spend a lot on the development and promotion of your brand and your products.
Business Adviser in the Russian Food Industry
Please read the same my other steps:Backward